The Standing Committee on International Financial Standards and Codes was formed by the Reserve Bank of India (RBI) in December 1999 to align India’s financial practices with evolving global standards. It was chaired by Deputy Governor Y. V. Reddy, with members C. M. Vasudev (Alternative Chairman); and Adarsh Kishore; and former members: A. Vasudevan; Arvind Virmani; V. Govindarajan; and Rakesh Mohan.The standing committee also set up ten advisory committees.

The committee’s work was driven by the need to enhance the country’s financial stability, particularly considering the vulnerabilities exposed by the Asian financial crisis in late-1990s. Ten advisory groups were formed to examine key areas, including monetary and fiscal transparency, insurance regulation, corporate governance, bankruptcy laws, and securities market regulation. These groups comprised experts who analyzed the relevance and applicability of international standards to India. Their task was to assess current compliance levels, propose legislative changes, and offer timelines for reforms.

The committee identified gaps in several areas, despite India’s general compliance with many international standards. The Advisory Group on Bankruptcy Laws recommended instituting a comprehensive bankruptcy code, replacing the Sick Industrial Companies Act, and introducing professional trustees for efficient management of insolvency cases. Corporate-governance reforms, such as the inclusion of independent directors, mandatory term limits for board members, and stricter disclosure standards, focused on enhancing board accountability and transparency. The Advisory Group on Securities Market Regulation recommended introducing rolling settlements in the equity market, enhancing margin requirements for institutional trades, and improving compliance with international investor protection standards. The insurance sector was found lacking in actuarial and solvency regulations, and the committee proposed stricter adherence to international standards issued by the International Association of Insurance Supervisors. In banking supervision, the committee emphasized the need for more robust risk-management practices, recommending amendments to laws governing oversight of bank directors and credit-risk assessment.

The committee’s recommendations for legislative reforms were extensive. These included amendments to the RBI Act, Securities and Exchange Board of India Act, Banking Regulation Act, Insurance Act, and Companies Act to strengthen the legal framework. New laws were proposed for fiscal responsibility, anti–money laundering (through the Prevention of Money Laundering Bill), and financial fraud prevention. For the payment systems, the introduction of real-time gross settlement and a framework for managing cross-market risks was prioritized. Additionally, to monitor the progress of these reforms, the committee recommended establishing a permanent institutional mechanism involving annual progress reports to be included in the RBI Annual Report and the Economic Survey.

The standing committee’s recommendations led to significant reforms, such as the introduction of real-time gross settlement in 2004, adoption of rolling settlements in equity markets, and enactment of the Prevention of Money Laundering Act in 2002. Monetary policy was partially separated from debt management with the establishment of the Monetary Policy Committee in 2016. The proposed comprehensive bankruptcy reforms were realized later with the Insolvency and Bankruptcy Code in 2016. However, the recommendation of a statutory Capital Markets Group remains unimplemented​.

The committee was formed in the wake of the Asian financial crisis to align India’s financial framework with international standards and strengthen financial stability. It addressed key areas such as bankruptcy laws, corporate governance, securities market regulation, and insurance oversight, recommending comprehensive reforms to bridge regulatory gaps and ensure compliance with evolving global best practices.